Future of Euribor under scrutiny as UBS quits rate setting panel

City A.M. Reporter
UBS said yesterday it would pull out of money market rate Euribor, one of the most prominent banks to do so after a global benchmark rate-setting scandal, in a move that renews questions about the rate’s future.

“We have decided to withdraw from the Euribor panel and to focus on our core funding markets Swiss franc and US dollar,” a UBS spokesman said, adding the decision was linked to an October decision to shut down vast parts of its investment bank.

Euribor and its larger counterpart Libor are Europe’s key gauges of how much banks pay to borrow from peers and underpin swathes of financial products from Spanish mortgages to derivatives contracts in London.

Running parallel to the probe into Libor setting, there is an official investigation into whether banks manipulated Euribor rates for their advantage.

The Swiss bank paid a $1.5bn fine in December over its role in a global scheme to manipulate rates.

UBS, which also exited an Australian rates panel earlier this month, follows Rabobank, which said in January it would quit Euribor.

A spokesman for UBS declined to comment on whether it would exit other rate panels.

Citi and Germany’s Dekabank quit or scaled back their Euribor involvement last year, thwarting an attempt by the European Central Bank to encourage more banks to join up.